- While the energy transition is undoubtedly underway, the EIA believes oil and gas will continue to dominate the U.S. energy mix in 2050 as population and economic growth boost energy demand.
- Electric vehicles are expected to become more popular in the coming decades but gasoline cars will still make up 79 percent of sales in 2050.
- U.S. crude production is expected to reach a record high in 2023 due to soaring oil prices and natural gas production will also increase as demand for exports grows.
Despite the fact that renewables will be the fastest-growing energy source in the United States over the next three decades, petroleum and natural gas will remain the most-consumed sources of energy in America through 2050.
That’s the projection in the reference case in the U.S. Energy Information Administration’s Annual Energy Outlook 2022, which explores long-term energy trends in the United States. The reference case, which reflects only current laws and regulations, expects overall energy consumption to grow through 2050, pushed up by population and economic growth.
Renewables will boom, especially in electricity generation, the EIA said in its long-term projection. Yet, petroleum will still hold the biggest share of overall energy consumption in the United States through 2050, followed by natural gas.
These estimates show that oil and gas are not going away anywhere soon and that America, and the world, will still need them in the long term despite the surge in wind and solar power, the rise of electric vehicles (EVs), and battery storage build-outs.
Gasoline Will Remain No.1 Transportation Fuel
Despite the rise in EVs, motor gasoline will remain the most prevalent transportation fuel in the U.S. over the next three decades, according to the reference case in EIA’s outlook.
The share of conventional car sales is set to drop due to the rising share of battery, plug-in, and hybrid electric vehicles. The combined sales of internal combustion engine light-duty vehicles will decline from 92 percent now to 79 percent in 2050. This suggests that even with the rise in EV sales, the gasoline car will still be king in America three decades from now.
Last year, light-duty vehicles (LDVs) accounted for more than half — or 54 percent — of the energy consumed in the U.S. transportation sector. By 2050, that share will drop, but will still remain at more than half, at 51 percent, according to EIA’s estimates.
The Biden Administration is pushing for increased electrification in the transportation sector, aiming to make 50% of all new vehicles sold in the United States in 2030 zero-emission vehicles. President Joe Biden vowed last year to replace the almost 650,000-strong federal vehicle fleet with electric cars as part of his climate agenda.
Near-Term Headwinds To EV Boom
Despite favorable Administration policies toward greener transportation and clean energy, growth could slow in the near term due to skyrocketing prices of the key metals used in battery manufacturing. Prices of lithium, nickel, and cobalt surged at the start of the year amid increased demand as all carmakers in the world are now unveiling plans to boost EV production and sales. The Russian war in Ukraine sparked another surge in raw material prices in recent weeks, and some manufacturers have started to raise their vehicle prices as battery makers are hiking battery cell prices.
Because of rising costs for raw materials, Contemporary Amperex Technology, the largest battery maker in the world, already announced today in a statement to Reuters that it had raised the prices for some of its battery cells.
Rising costs for raw materials and logistics have already made Tesla (NASDAQ:TSLA) raise its prices for China and the United States. This month, Tesla raised its prices for the second time in less than a week.
“Tesla & SpaceX are seeing significant recent inflation pressure in raw materials & logistics,” Elon Musk tweeted last week.
Cars And Industry Primary Consumers Of Petroleum By 2050
It will be the transportation sector and industrial processes that will be the primary consumers of petroleum and other liquids in the United States, the EIA says. U.S. industrial sector energy consumption will grow more than twice as fast as any other end-use sector from 2021 to 2050. In the industrial sector, the most growth in demand for petroleum is for hydrocarbon gas liquids (HGL) used as a feedstock. Petroleum will remain a major fuel for non-manufacturing industries such as agriculture, construction, and mining, as well as for refining processes.
U.S. Oil Production Seen At Record 13 Million Bpd In 2023
Driven by rising oil prices, crude production in the United States is expected to rise in 2023 to a record-high on an annual-average basis of 13.0 million bpd, the EIA said in its Short-Term Energy Outlook (STEO) for March earlier this month. The current estimate is now raised from the 12.6 million bpd forecast for 2023 in the February outlook.
U.S. production of natural gas and petroleum and other liquids will rise amid growing demand for exports and industrial uses, the EIA annual outlook says.
“Driven by rising prices, U.S. crude oil production in the Reference case returns to pre-pandemic levels in 2023 and stabilizes over the long term,” the administration said.
Over the short term, U.S. oil production will rise amid skyrocketing oil prices, but not nearly enough to plug the large gap in global oil supply that Russia is expected to leave as soon as next month.
While the Biden Administration finally called on its own producers to boost production - which they cannot do in a month or two - the U.S. oil and gas industry has reiterated that America needs to treat its oil and gas like an asset rather than a liability and invest in long-term energy security.